Better Collective A/S (BETCO) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Better Collective Q4 2021 presentation. [Operator Instructions] I would now like to hand over the call to your speaker today, Mr. Jesper Sogaard. Thank you. Please go ahead.

Thank you very much. On a day where people are rightfully focused elsewhere, we'll give an update on Better Collective and what has happened in Q4. So my name is Jesper Sogaard, and I'm the Co-Founder and CEO of Better Collective. And with me today is CFO, Flemming Pedersen. Before we dive into the fourth quarter, I want to thank everyone at Better Collective for their dedicated effort and contributions to our success. We had a prosperous 2021, and our employees persistently delivered an outstanding performance during the year. I would like to thank all our business partners, operators, users, shareholders and other partners that all together constitute an ever-developing strong network. Flemming and I are very excited to be sharing our Q4 report with you. As the quarter and the full year 2021 marked records in revenue, earnings and customers sent to our partners. 2021 in Q4, in particular, marked a real breakthrough in the U.S. market, not least for Action Network and with our new strategic business lag the media partnerships. All this have accelerated into the New Year, where the month of January marked the much awaited opening of online sports betting in New York, which resulted in a completely unprecedented business performance. Thank you for tuning in and for showing an interest in Better Collective. Now let's get going. Please turn to Page 2, where we display our disclaimer regarding any forward-looking statements in this presentation. I ask you to please pay attention to this. Please turn to Page 3. The agenda for today's presentation is structured as followed. I'll start the presentation by going through our Q4 business highlights. Hereafter, Flemming will walk you through the Q4 and full year financial performance, while we'll also dive into some of our most important KPIs. Before passing the word back to me, Flemming will touch upon our 2021 and 2022 financial targets. Hereafter, I will give some perspectives on the trends we see in our business, a review of our U.S. growth path and fill you in on relevant updates for the rest of our business, most of which relates to regulatory developments. As usual, I'll round off by highlighting what I believe to be the key takeaways, and then we'll open for a Q&A session. Please turn to Page 4. For Better Collective, Q4 was characterized by a record high intake of new depositing customers, but both in the emerging U.S. markets, but certainly also in Europe and LatAm. When evaluating the performance, there are a few things to observe. Firstly, we have seen low sports win margin in the second half of the year, not least in Q4. Part of this is due to us sending record high numbers of NDCs on revenue share contracts with short-term dampens revenue and earnings, but which, of course, adds to future recurring revenue. Because of that, we have, for the first time, decided to show the split in NDCs on revenue share and other business models. In addition to this effect, we've seen low sports win margin in some months and also noticed that from some of our business partners reporting due to the outcome of sports results. This was, in particular, the case for October. Secondly, when comparing Q-on-Q, Q4 last year saw a strong sports win margin and we also still had some cost effects from our COVID cost-saving program affecting earnings positively. Despite this, I'm very satisfied with the positive development of our business during the final quarter of 2021. And we have, as mentioned, already seen a very exciting start to this year. Please turn to Page 5. Fourth quarter showed strong growth. We faced some headwind because of an exceptionally low sports win margin. And as we continue to send a larger number of NDCs and revenue share contracts, this further dampens revenue and profit in the short term. Nonetheless, we closed the quarter with revenue of close to EUR 53 million, which equates a 44% growth compared to Q4 2020, of which 25% was organic growth. Our operational earnings increased by 16% to EUR 16.3 million, whereas cash flow from operations before special items was EUR 13.4 million. Earnings margin and cash conversion were both satisfactory and in line with our 2021 financial targets. The number of NDCs delivered to our partners continued its strong growth trend, which we have been experiencing since the end of 2020. However, most profoundly in the second half to 2021. Q4 delivered an all-time high of more than 267,000 NDCs, which is a 75% increase compared to last year. Flemming will revert with more information on the finances, including some insights into the underlying performance of the business. Please turn to Page 6. Looking at the business performance, I would like to highlight some of the more significant developments in Q4. The green dots represent what's particularly exciting during the quarter. As I've already mentioned, Q4 was a strong season with high sports activity, both in the U.S. and in Europe, even though some gains in December were postponed due to COVID-19. Group revenue increased 44% to EUR 53 million, establishing a new company record. Our U.S. business delivered prime results following the start of the NFL season and other major U.S. sports leagues and has been a strong growth driver this quarter. The U.S. revenue landed on almost EUR 20 million in Q4. In our European business, we saw solid performance in a changing regulatory environment. And I'm very impressed by our teams and how they have managed to adapt to rapid changes in due time and with the right measures. Throughout 2021, we have sent record high numbers of new depositing customers to our partners, peaking in Q4 with NDCs exceeding 267,000, whereof more than 190,000 were on revenue share contracts. I'm very excited about this development as it secures future recurring revenue. However, these quantum leaps come with a short-term dampening effect on revenue and earnings, currently mostly affecting our non-U.S. business. Combined with an all-time low sports win margin in the quarter, we have estimated a downward effect on revenue and earnings of approximately EUR 6 million for Q4 compared to the historical average. That said, we continue to pursue and favorable revenue share as a preferred business model, and we have already started working on the first revenue share contracts with U.S.-based operators. Please turn to Page 7. With the activity and performance in January this year, I also wanted to add a few comments here. The successful development in NDCs is a result of several factors, one of them being the strong performance in our media partnerships, which we further expanded in the beginning of 2022 by signing an agreement with the New York Post. With this partnership, we wish to bring the best in commercial sports betting content to the publications readership of more than 92 million unique users. And I can safely say that starting the partnership just about the New York opening was just perfect timing. Speaking of, on January 8, 2022, the state of New York open for online sports betting. And New York is already the top grossing state of all time. We're off to a great start in this new state, which has contributed to a record high January. January revenue landed at an extraordinary more than EUR 26 million, which is double that of 2021, boosted by the market opening in the state of New York and related CPA income. For further perspective, January 2022 reached half the revenue of what was generated in all of Q4, earnings for January followed and ended of more than EUR 11 million. Please turn to Page 8, where I'll give the word to Flemming.

Thank you very much, Jesper. Now let's look at the financials for Q4 and the full year for 2021. Please turn to Page 9. From Q4 2020 and following the acquisition of the Atemi Group, we have been operating 2 different business models for customer acquisition, Publishing and Paid Media. And from Q2 2021, following the acquisition of the Action Network in the U.S., we have been reporting separately on the geographical split, U.S. and Rest of World. Revenue in our Publishing business grew 70% of which 36% was organic growth to EUR 38.9 million and accounted for 95% of Group's EBITDA in Q4. The revenue in the Paid Media segment was EUR 13.9 million, and the organic growth was flat for the quarter. The Paid Media segment continues to be impacted by our decision to switch more NDCs from pure CPA to revenue share contracts or hybrid revenue models. And additionally, we have faced some headwinds throughout the year. Hence, revenue and EBITDA margins in the business were impacted negatively in the short term with EBITDA for Q4 of EUR 0.7 million. However, in the latter part of the quarter and continuing into January 2022, performance has already improved significantly, and we are now seeing double-digit growth and double-digit earnings margins, just where we want to be. The U.S. business delivered strong performance and contributed almost 40% of total quarterly group revenue in Q4. EBITDA exceeded our expectations and revenue was close to EUR 20 million. This is more than 5x the revenue of Q4 2020. The Rest of World markets was impacted by the exceptional low sports win margin as Jesper mentioned and the high intake of NDCs, causing a flat revenue development during the quarter, landing at EUR 32.9 million. As Jesper mentioned earlier, when comparing to Q4 last year, where we saw high sports win margin and the cost base that we lowered throughout the year due to the COVID situation. Please turn to Page 10. Toning in on Q4, total revenue was EUR 52.8 million, which is a 44% growth compared to the same period last year. The organic growth was 25% and the revenue split was 74% from Publishing and 26% from Paid Media. Income from revenue share contracts accounted for 32% of total revenue, with 48% coming from CPA, 8% from subscription sales and 12% from other fixed income. Currently, the U.S. is predominantly a CPA market, but our U.S. business also includes increasing revenue from subscriptions and in connection with the New York opening, we have signed the first revenue share-based contracts with U.S. operators. Q4 income from revenue share contracts would have been approximately EUR 6 million higher if the sports win margin had been at historical average as we saw in the first quarter -- also as we saw in the first half of 2021, whereas the impact is estimated to be approximately EUR 10 million for the full year. Following a record break in Q3, we delivered an all-time high of more than 267,000 NDCs in Q4, and we also saw continued strong performance from our media partnerships. NDCs sent on revenue share contracts exceeded 190,000 in the quarter, which, as we already pointed out as significant to the value of future of recurring revenue. Please turn to Page 11. As usual, to illustrate the development in our revenue share counts, we share the index development in our 2 important KPIs, sports wagering and sports win margin. As can be seen, sports wagering or the gross betting volume spikes, which reflects high activity, but it's also a result of the many NDCs that we have been sending in recent quarters. On the other hand, the sports win margin is at a historical low point in Q4. We do expect sports win margin to increase in the coming quarters. However, what of caution is that we may not necessarily get back to historical averages as we see new mix of geographies and sports to bet on. That said, our main focus -- our focus remains on sending as many valuable players as possible in order to maximize the absolute recurring revenue, and we always stay focused on the long-term value of the customers in each market. Please turn to Page 12. Moving on to the operational earnings EBITDA. Q4 was a new record and as can be seen from the graph, EBITDA would have been, as mentioned, EUR 6 million higher if the sports win margin had been at prior average illustrated by the blue top in the bar chart. With operational earnings of EUR 16.3 million in Q4 2021, the EBITDA margin was at group level, 31% compared to a margin of 38% last year. The EBITDA margin in Q4 2020 was exceptionally high with 54% in Publishing and 13% in Paid Media. The high margin in Publishing in Q4 2020 was due to the remaining effect of the cost-saving program in connection with the COVID-19 closedowns, and the higher EBITDA margin was also partly due to the high sports activity from postponed matches combined with a favorable sports win margin above average. In Q4 2020, the Paid Media segment was also not yet impacted by our decision to change our business model more towards revenue share contracts. Transition, which was initiated during 2021. Because the Paid Media business model gradually has been changed towards revenue share contracts. This has lowered the EBITDA margin also in this quarter. Costs in the quarter were impacted by the acquisition of Action Network in May 2021 and further investments in the U.S. market. The cost increased to EUR 36.4 million from EUR 22.6 million in Q4 2020. The Publishing cost reached EUR 23.3 million, whereas the Paid Media cost reached EUR 13.1 million. We remain very focused on controlling our business via the EBITDA margins. The U.S. business in that context recorded more than 40% EBITDA margin for Q4, which shows that the scaling of the business has come quite fast. Income tax year-to-date amounted to EUR 8.9 million. The effective tax rate was 34.1%. Tax cancellation has been updated with carryforward losses and the tax amortization based on intangible assets in acquired companies in the U.S. following final assessment of the accounting and tax treatment. The related deferred tax assets and liabilities have been adjusted accordingly. These adjustments were made in Q4 and thereby following the ETR for the quarter is only 12% against Q4 2020, where the ETR was 23%. Please turn to Page 13. Looking at the cash flow and balance sheet. The Q4 operating cash flow before special items was EUR 13.4 million, an increase of 32%. The cash conversion was 81% for the quarter and 92% for the full year. By the end of Q4, capital research stood at EUR 33.5 million, including cash of EUR 30.1 million in unused bank facilities of EUR 3.4 million. Net debt-to-EBITDA ended at 1.96% well below our target of 3.0%. Please turn to Page 14. Let me round off with a quick look at last year's -- at the last year's financial performance. We have seen high growth in revenue, earnings and cash flow with a CAGR, cumulative annual growth rates of more than 50% in the past 4 years across these key financial KPIs. With this as a basis, let's look at the financial targets for 2021 as a follow-up and also the new ones that we have decided to disclose today for 2022. Please turn to Page 15. Let's start with a review of the financial targets for last year 2021. The Board of Directors decided on targets for the year 2021 and updated these following the acquisition of the Action Network. The group targets for organic growth and the EBITDA margin and capital structure we all met, whereas the revenue growth target came in a bit below, mainly as a result of what we mentioned on the lowest bolt-on margin discussed earlier. The Paid Media business segments performed lower than expected, whereas the Publishing segment performed significantly better. Historically, Better Collective has disclosed financial targets for the coming year and our financial targets have focused on growth, profitability and debt leverage. This has allowed us to stay focused on the organic development of the company, how profitability is being managed and how the M&A strategy has been value accretive. For the New Year 2022, the focus will be exactly on the same KPIs and aspects, including executing value-accretive acquisitions. From an operational perspective, focuses on organic growth and profitability. The financial targets for 2022 has been decided as follows: organic growth between 15% to 25%, group EBITDA of approximately EUR 75 million, i.e., a growth in earnings of more than 30%. Debt leverage below 3.0. The financial targets do not include new presential acquisitions and the assumptions behind the targets include continued strong performance in our U.S. business, including continued market openings in new regulated markets. Also that the U.S. market will still mainly be a CPA market. However, as we experience more operators being open to work fully or partly on revenue share, this will be preferred as say, pending deal terms. If we are successful in reaching attractive revenue share contracts in the U.S., this might impact revenue and earnings short term and if this will be implemented, the financial targets may be adjusted accordingly. Now please turn to Page 16 and the word back to Jesper.

Thank you, Flemming. In the following, I will walk you through a few selected topics that we believe will shave our business in the future. This includes a review of our U.S. business that within short time has become our biggest single market, while the U.S. is also a market that is expected to grow even more in the coming years. Lastly, I'll touch upon recent regulatory changes that are important to our business beyond the U.S. Please turn to Page 17. Generally speaking, we continue to see several megatrends that are shaping and developing our business. The developing technology and growing use of mobile devices have made iGaming accessible to a wider audience and have also resulted in an increasing demand from users with regards to their iGaming experience. As iGaming becomes increasingly more widespread, many countries are amending or implementing new iGaming laws and regulations. In order to control national taxation and control, 2 good examples of this are: One, the recent regulation in the Netherlands; and two, the current regulation across the U.S. Additionally, for 2022, we expect Brazil and Ontario, Canada to become regulated markets. Globally, the highest penetration of online sports betting and casino is currently seen on the European market, which is also the stronghold of Better Collective, where more than half of the activity is online. In line with increased digitalization and new products becoming available for betting, the use of mobile devices means that the users can bet anytime and anywhere, and this also drives the in-game betting, which is currently on the rise. We do also see more sports events and new sports that become eligible for betting these years, including esports. So far, we are well established with HLTV in Counter-Strike. We expect that these megatrends will drive fundamental growth to the online sports betting and gaming for many years to come. Please turn to Page 18. I Zooming in on the U.S. market, which was predicted to become an enormous market, and now we are here in the middle of it. In less than 3 years, the U.S. market has become the single largest market for us. Let me recap our path to where we are today. The U.S. sports betting market opened almost at the same time as we completed the IPO of Better Collective in the summer of 2018. We quickly directed our M&A work towards this new opportunity. In mid-2019, we acquired RotoGrinders, VegasInsider and Scores and Odds. We also signed our first media partnership with NJ.com. As for most other businesses, our 2020 was significantly impacted by the COVID pandemic. However, 2021 resulted in a strong comeback with high growth, and we also managed to acquire the action network for USD 240 million in a competitive bidding process. The Action Network was acquired just as the business was turning profitable and just in time for important new state openings. First with Arizona in September 2021, and then New York in January 2022, where we also added a media partnership with the New York Post. Better Collective became a licensed vendor in New Jersey in 2014. And since then, our U.S. presence has grown tremendously. At present, we are live in 16 states, and we expect more to open in the coming years. At present, we have more than 200 employees in the U.S. with offices in New York, in Miami, and Nashville, Tennessee. With our recent acquisition of the remaining shares from the first acquisitions of RotoGrinders network, we now have all options to harvest synergies across the business, and we have established a dedicated U.S. management team anchored in approved management. I have to say that I'm very proud and satisfied with the position we have built. Please turn to Page 19. Given the continued pace of new states regulating, we expect the U.S. market to continue growing fast and our U.S. revenue to surpass $100 million this year with increasing operational earnings. Looking at the chart, it's impressive to see how our U.S. business has grown since 2020. And this really reflects the market opportunity in front of us. In January 2022, revenue landed above EUR 13 million, meaning that January alone tapped all of 2020. On the state regulation side, recent developments include that Louisiana opened by the end of January 2022 and presents new possibilities, though at a smaller scale. In Ohio, a sports betting law was signed at the end of 2021, paving the way for the market to launch in 2023. By population, Ohio, 11.7 million residents, most closely compares in size among established sports betting markets with Illinois and Pennsylvania. Currently, the third and fourth largest sports betting market in the States. In Arkansas, plan to launch the mobile sports wagering market in time for the Super Bowl was delayed until March, so the lawmakers can update their proposed rules. The state of Illinois is expected to allow full online registration during 2022. Please turn to Page 20. Rounding off, I have a few comments on the development and updates on the rest of our business. Looking at the regulatory developments, online gambling has been legal in the Netherlands since 1st of October 2021. In Q4, Better Collective started business in the newly regulated Dutch market and saw a good start, especially from the newly acquired soccernews.com The Dutch market looks very promising for Better Collective not least as more operators joined this year. Canada's first province Ontario is set to see big changes in legal online sports betting as the province is expected to allow online betting from April 4 this year. We are already preparing to roll out key U.S. and international brands in Canada as soon as relevant licenses are acquired and regulation allows. In Germany, a new regulation came into force on July 1, 2021. While some market adjustments have been seen in the short term following the implementation of the new interstate treaty, the overall market outlook for Better Collective is promising and our business is intact and growing. Lastly, the Swedish government announced that the temporary COVID-19 restrictions for online gambling were to end as planned on November 14, 2021. And upon lifting the restrictions, we have seen increased activity in the market. In November, we launched the self-assessment tool Gamalyze from Mindway AI on our main sports betting media website. Gamalyze makes it possible for visitors to get insight into their decision-making behavior for gambling. For the third consecutive year, Better Collective was awarded the price Sports Affiliate of the Year at the SBC Award show in London. I'm honored and excited to see how our efforts to stay as relevant to our partners as possible are being repeatedly recognized by the industry. The past month, we've been revising our management structure to ensure Better Collective remains a growing and resilient business. During Q4, we welcomed a recently hired SVP of Product and tech to further strengthen their technology focus behind our sports betting media brand and soon to join SVP of Strategy to strengthen our ambition to further scale our business within the sports betting media industry. An additional 5 internal promotions to group management positions will further strengthen our key business and functional areas. Please turn to Page 21. We have now reached the end of our Q4 and full year presentation. Please turn to the next page where I'll walk you through the key takeaways for the quarter. Firstly, Q4 was a solid quarter that saw record performance. Our U.S. business delivered prime results following the start of the NFL season. U.S. revenue reached nearly EUR 20 million and is now one of our strongest growth drivers. Yet again, we delivered a record high intake of new depositing customers, exceeding 267,000 customers were of 190,000 were on revenue share contracts. In Q4, our media partnerships continued to deliver strong performance. We also further expanded our media partnerships in the beginning of 2022 by signing a large collaboration with the New York Post. After the closing of the quarter, New York launched online sports betting likely will not have many launches on the scale of New York in the near future. Yet this is still a success story worth highlighting. This concludes our webcast presentation, and I'll now pass the word back to the operator and open for questions from the audience. Thanks for listening in.

[Operator Instructions] And our first question is from the line of Oscar Ronnkvist from ABG.

A few questions from me. So just beginning, regarding the start of Q1, how much of the growth can we extrapolate to the full quarter? And are the postponed games impacting NBCs or revenue shares accounts the most?

I think, obviously, with New York going live in the beginning of January, we have sort of the boost effect we have seen before in other states when they launch -- but we also now have access to a significantly larger state than before. So it does affect the revenue, but not sort of similar to the boost we saw in January.

All right. So could you say that like the 100% growth we should not like extrapolate that for the full quarter year-over-year?

No.

All right. And the next one, if you could discuss your expectations of the Ontario launch. So first of all, how does the competitive market look like as it is a gray market today, to my knowledge. And what can we expect in terms of seasonality due to the large interest in hockey, for example, as opposed to NFL in the U.S.

It's a good question. And some of those questions is also interesting for me to learn. But starting out with the competitive situation, yes, you have sites already operating. But I actually think it will be pretty similar to what we see whenever a state launches in the U.S. because there is a big influx of sites and players that want to get a position in the market. And I expect a similar behavior when Ontario goes live. So it will be competitive, but it's not something that is unusual for us.

All right. Understood. And just in terms of seasonality there, do you expect like Q2 to be a very good quarter as the NHL season is still ongoing?

Yes. So obviously, the NHL is important and kind of very important. But to be honest, again, it's a new market for us. So predicting the behavior of that is difficult. But obviously, it's a sport that we know is very important, and therefore, we will also from the content side, cater to that.

All right. Got it. So next one, just in the U.S., you touched upon a revenue share agreement. Can you say anything about the level of revenue share between the U.S. and Europe?

Well, it's still early days, but what is -- what has been interesting with the launch of New York is that more operators and for the first time, like U.S.-based offers seem interested and considering the revenue share model, which we are in favor of with a long-term view. And then it all comes down to negotiating and finding sort of the right format and deal for that revenue share, whereas we in Europe have sort of quite similar practices in place across the operator. So I think the market is finding its feet in the U.S. We are now testing with some operators and we'll, of course, evaluate based on that.

All right. Understood. Just I got a follow-up on the Canadian market also. So just looking at that because Ontario is launching both sports and casino, would you expect like a significant impact in revenues from the casino also just, I don't know, like in Michigan, for example, or is it like the sports betting that's like the majority of your revenues in that market?

It is mainly sports betting, which is because that's the focus of Better Collective. That said, we also engage with the iGaming market whenever it's possible, and we have products and sites to provide. So for us, we look at the full opportunity in Canada, and we're going to go for that. But as you probably know, it's our focus and expertise is predominantly with sports betting, but still, we will definitely go for the full opportunity.

Our next question is from the line of Hjalmar Ahlberg.

First, maybe on the growth target. So just to talk about the acquired versus organic growth. So I've understood correctly. I mean, the big acquired growth will impact a lot in Q1 I guess because the [indiscernible] wasn't acquired until late Q2. So just if you can confirm that's the main quarter where you will see acquired growth and then more toward organic growth in the second half of the year, so to say.

Yes. I think you are right that we will have a clearly even say an effect from Action Network, that was, you can say, also a much smaller business last year. But yes, there will be acquisition growth on top. So what we are guiding is pure annual organic growth, what we have put out there.

Right, right. And if you take the range of 15% to 25%, where would you say that -- I mean, the risk or the reason behind the broad range, is it the range of growth in U.S. or uncertainty in the growth in Europe or Rest of World?

I think we can say with the growth, I actually don't think it's -- I can say the premise is -- that it's a narrow target. It's something that we believe we can achieve. Clearly, we see high growth in U.S. also now just the month of January in the U.S. will be part of this. So U.S. is clearly the main driver right now. But as we also discussed, we see new markets coming in, Canada opening, which also will be, I mean, pure organic growth, all things being equal.

Right. And then more specifically on the European market. I guess that was impacted a lot this year by the way sports win margin. And you do say that it might be lower long term as well. But still, with that said, I think you sound pretty positive in terms of all European markets. I mean the Netherlands is coming in for one. So European markets should have fairly easy comps in 2022. Is that a fair assumption, you would say?

I would say that's a fair assumption. Yes.

Okay. And then coming to the target, again, just one final on that. You did not put out a kind of a top line target, but a growth target. Is that because you want to, I mean, exclude -- I mean, you see potential M&A, is it mainly because you might do M&A that you only give the organic growth target rather than an exact number on the top line revenue?

Well, it's actually you can say the absolute top line is, of course, important, but it's also something where we can -- since we also now have added the Paid Media, there is, you can say less value to that number isolated than before. So that's why we have focused on the organic growth and the absolute earnings.

Got it. And finally on M&A, maybe, can you say anything about what you're looking for in M&A. Do you think you will look to strengthen positions in existing markets? Or will it rather be to enter new markets?

Well, we will consider anything. So we get a lot of inbounds, we ourselves reach out to interesting businesses that we think fit our strategy well. And that could both be from a geographical aspect, it could also be a certain type of market that we would like to focus on product wise. And I think Better Collective has a very strong name in terms of being a potential buyer whenever a seller considers selling the business. And we have a strong team in place to assess and evaluate all these targets. And I think we've stated several times that M&A is a very important part of our future strategy. So yes, we look at a lot, and it's of course, it has to fit with our strategy, and that is what is sort of how we navigate M&A.

Got it. And maybe a final question on the profitability. I know you don't give any profitability guidance, but if you look from where you are currently and assuming that you will grow going forward, I know you're putting a lot of efforts in the growth investments now. But longer term, would you say that you would see a gradual expansion of the EBITDA margin from there?

Yes. I think that we will expect that given even say, the scalability. Now we have been since short time seen the U.S. market, as an example, being -- going from an investment phase into profitability that sort of matches the rest of the Publishing part of the business. We also mentioned the Paid Media where we can say now have even more stable or steady state, hopefully and very focused there and also margin expansion. So I think, yes, we expect also stay very focused on scaling the business, so the margin follows an increase.

[Operator Instructions] Okay. We have some questions on the phone, please continue.

Okay. We have some questions online, and I will read them out loud. One question. Over the last year, do you think BETCO'S global competitive position has weakened, strengthened or remained unchanged? Why do you think so? I feel we are in a strong position, so strengthened, I would say. And I think it goes hand-in-hand with the investments we do in the new markets that we enter. We are quite aggressively investing in the experience of our users. So we create engaging products and content. At the same time, we have broadened the reach with doing media partnerships. And all of this definitely is putting Better Collective in a strong position than historically. So it's -- for me, looking at the entire business as better place, I think we are in a very strong position. And when I look ahead, it's -- I'm definitely optimistic. The next question from [ Florian Landry ]. Any comment on why the EBITDA margin fell during the quarter.

Yes, I can take that. We actually commented on that in the speech. We had a Q4 2020 that where we saw a very high sports win margin. And also, we had the remainder of the cost saving programs that we installed during the COVID period. So that was, I would say, on that KPI, a very tough comp. So on the opposite, in this quarter, Q4 2021, we saw very low sports win margin and October being a historical low point. So these are the fluctuations that explains the data in the percentage margin.

And the next question also from Florian Landry. Management is targeting 15% to 25% organic growth for this year. Does the guidance include new regions like Ohio and Ontario and considering the strong start in January, isn't it too conservative? Well, it is in including sort of the expected regulatory developments, Ohio, is at least in our opinion, less certain than Ontario, which we do expect to see in April. So that is built in. And obviously, we have had a strong start to January, and I'm very happy and pleased about that. Still, we gave a range of 15% to 25%. And obviously, we hope to be in the higher end of that. And ideally, we would like to outperform it. But from the managements' point, we are right now, it's -- we think it's the right range to get. And the next question from who's called [ EP ]. Ballpark figure of how much of the BETCO's revenues you would say are recurring, roughly speaking. What is your ambition for this number in 5 years?

I think if we look at Q4 in a normalized way, so expecting a sports win margin that would be in line with the historical average, we will probably be at 40%, 45%, actually maybe close to 50%, including subscriptions when we talk recurring. And I think that is likely also what we would see in the future. What is the big uncertainty here is the development of the American market. It is a CPA market right now. We are in process of switching with some partners, but the build of a revenue share will, of course, take time. And we also don't know how it will develop. Ideally I think being at 50% of our revenue being recurring would be great and potentially even higher, which we have seen in the past with our business. but it's very difficult to give a specific number that we expect due to market dynamics that we are not fully in control of.

Next question is from [ Lars Young Caspersen ]. Acquisitions has been part of your business. Are you still interested in further acquisitions in U.S. or where do you want to be over the years or are you where you want to be over the years? I think we are very comfortable with the position we have in the U.S. within online sports bet in media, we are the #1, and we believe we can build from that position. So it's not a need to buy something, but there could be opportunities that we would think would be a nice supplement to our activities there. So I wouldn't rule it out, but it's more of a nice to have than a need to have in the U.S. Next question from [ Rajiv Bal ]. Two questions, please. How much of a win margin tailwind is reflected in the January revenue figure? And how much is from underlying growth? What evidence are you referencing in your comment about sports win margins improving in the coming quarters. Does January and February experience support to this statement? Well, we can just comment on January because that is what we have so far made public. There, there is, which we also mentioned an effect of CPA in the U.S. because we have seen a big lift due to New York going live. We are still seeing a growing number of new defrosting customers being sent on revenue share agreements. And we also see the underlying metrics there with deposit amounts and turnover going up. So there's no doubt we expect that part of the revenue to grow in the future. And for January, we didn't see any big outlier either upwards or downwards in terms of the sports win margin. Going to the next question from Florian Landry. Paid Media significantly lagged behind organic growth target in 2021. Are we expecting better organic growth for 2022? We did experience some headwinds for that segment last year, and we weren't fully satisfied with the development. But what does have -- does give us some optimism was that at the end of the year, we saw a good performance, and that continued into January. So from where we are looking right now, yes, we are optimistic that we will see improved performance for Paid Media in 2022. And then a question from [ Anas Hidopov ]. The change in Paid Media towards revenue share contracts had a negative impact also in Q4. When we will start meeting easier comps due to this transition and when should Paid Media revenues be back at normal, i.e., higher trend level, i.e., no negative transition effects.

Thanks. I think I can answer that. As we also said, we actually can say towards the end of the year. And also in January, we have seen a much better performance in Paid Media. And also, you can say, campaigns in the U.S. beginning to be profitable. So clearly, we expect Paid Media to perform much better in 2022. We have seen some headwinds after the acquisition, I would say, specific things. So -- but we have been focused on say facing that and get back on track. So I think we will see a better 2022. Clearly, when you also transition to revenue share contracts then in Q4 when you then have a very low sports margin, that's not, I can say, ideal, of course. But that said, there seems to be much better performance now.

All right. And the next question is from [ Paolo Suprian ]. In the guidance for full year 2022 is implied the sports win margin to be back to the average level?

I think we gave some bit of flavor to that. It's not something that we can control because it's basically pending, we can say, sport results offsetting bonus campaigns, et cetera, by our partners. So we can just follow that. We do expect, let's say, sports win margin to come back to a more normalized level, clearly. But we also see that with the many new entities from new geographies, we do see a change in mix. So it's -- I would say it's not as predictable as in the past. So our focus is simply to send as many customers as possible and then evaluate each market. And we're actually doing that on a daily basis throughout. So it's something that we are very close to -- but with the growth of the whole industry, new markets, new sports to bet on, the mix will change somewhat. So that's why we are a bit cautious on whether we will get exactly back to the historical average in percentages. No doubt that the absolute revenue share should increase significantly in the coming years.

And the last question from EP. Can you provide some more info regarding the geographic split regarding the new NDCs in Q4, approximately how many percentage of the 190,000 revenue share indices are from the U.S.? Well, we don't give information specifically to the geographies. But regarding the U.S., we can say that still the vast, vast majority of NDCs are being sent on CPA campaigns. So it will be a very limited number that are sent on revenue share for the U.S. And with that, I would like to thank you very much for listening in and also giving good questions to us, and I wish all of you a good day despite the events in Europe. Bye.

This concludes today's conference call. Thank you for participating. You may now disconnect.